How the 2008 Tax Rebates Work

U.S. Treasury Secretary Henry Paulson (left) and Chairman of the Council of Economic Advisers Ed Lazear (right) hold a briefing on the economy on January 18, 2008, at the White House in Washington, D.C.

For each child under 17 (as of December 31, 2007) whom you claim as a dependent: $300

As mentioned previously, if you have an AGI over $75,000 (if you file single, married and filing separately, or head of household) or $150,000 (married and filing jointly), your rebate will be reduced by 5 percent of the amount over the limit.

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For example, if you're a single woman sans children with an income of $78,000, your tax rebate will be reduced by 5% of $3,000 ($78,000 - $75,000 = $3,000).

For a jointly filed return (eligible for a $1,200 rebate) with an income of $170,000:

$170,000 - $150,000 = $20,000

0.05 x $20,000 = $1,000

$1,200 - $1,000 = $200 rebate

If the couple has three eligible dependent children, they would receive a bonus of $300 per child, for a total of $900. Their $200 rebate would jump up to $1,100.

So, if you have a single income of $87,000 or a joint income of $174,000, your rebate has fallen to $0, unless you have eligible child dependents.

If you owe taxes this year, or if you're paying taxes on an installment agreement, consider the rebate a discount on your taxes. The IRS will automatically apply your rebate to any outstanding tax liability you might have. In some cases, the IRS may also apply your rebate to other federal debt, such as student loans or child alimony. Visit the IRS website for more information.

To find out when you're going to get paid, read on so you can plan your purchases.

The Child Bonus

The IRS is strict about the bonus for dependent children. If your dependent child can legally see an NC-17 film, i.e., she is 17 or older, you cannot get the bonus bucks.